Investments in IT upgrades can be costly,
but they’re essential to making a business
more efficient. IT experts highlight how to evaluate technologies that strengthen employee performance.

Investments in IT upgrades can be costly, but they’re essential to making a business more efficient. IT experts highlight how to evaluate technologies that strengthen employee performance.

Technology failure isn’t solely a government problem. There are numerous stories about businesses—major retailers, for instance—that updated their IT systems without skillfully managing the implementation. The failures often end up costing millions of dollars—and valuable brand equity.

To be sure, most businesses don’t face technology challenges of the MNLARS magnitude. Still, with technology constantly evolving, even a small business can face big, costly problems if its IT isn’t up to date.

So what changes should private companies be looking at now? And how can they help make sure that the changes they make don’t turn into the types of snafus MNLARS officials have had to deal with?

Bigger thinking for smaller businesses

Companies of all sizes have had IT systems in place for a long time. But as businesses grow, small companies in particular tend to cobble their systems together.

Oftentimes, there isn’t a lot of planning, notes Mike Maki, director of operations for the IT Solutions Group at Bloomington-based Loffler Companies Inc. Maki’s group provides managed services for smaller business clients. “We are the IT department” for those customers, he says. The group also provides a variety of specialized IT services for larger companies.

In working with smaller companies and assessing their systems, Maki says that many of them are using cloud computing—or they want to do so. The cloud comprises the numerous as-a-service offerings available over the internet—software as a service, infrastructure as a service, storage as a service. Amazon, Google, Microsoft, IBM, and many other specialized firms like Rackspace provide cloud services. The cloud can offer significant IT savings and efficiencies for companies of all sizes.

But not if a company’s IT system can’t connect with the cloud. Internet-based cloud applications “can be a little less forgiving about how well the network is running,” Maki says. An out-of-date or glued-together system can make it impossible for cloud services to run well.

Small businesses also should determine whether their IT systems can make the best use of all the internal and external data they’re accumulating. It might not quite constitute the “Big Data” that online marketing companies often allude to. But even small companies have access to large amounts of customer and vendor data, which can encompass customer buying patterns, inventory levels, and more.

Small businesses also should determine whether their IT systems can make the best use of all the internal and external data they’re accumulating. It might not quite constitute the “Big Data” that online marketing companies often allude to. But even small companies have access to large amounts of customer and vendor data, which can encompass customer buying patterns, inventory levels, and more.

But that data needs to be translated into information that a company can use. Maki’s experience is that smaller firms understand almost all of their data. The problem is “they do not have visibility into it,” he says. In other words, their data isn’t as useful as it could be. “Making that data meaningful is a big deal,” he adds. Getting that information to the employees who need it will allow them to do their jobs better, whether they are executives or front-line workers who interact directly with customers.

So how does a business accomplish that? For small and not-so-small companies, perhaps the best approach is a dashboard that organizes all that data into one central screen. “There are a lot of applications out there that are made for dashboarding,” Maki says. “They are easy enough for businesses to get up to speed on quickly.” Businesses can set up many of these applications without someone having to build the underlying databases or other complex technology tooling.

Organizing data is particularly useful in taking and managing customer orders. Many companies might not have anything as formal as a call center. However, if they have interactions with different departments or contracts with the customer, Maki says that it’s valuable to take that data and understand what a given phone call is about. In addition, he notes that it’s helpful to know about customer contracts, what products and services they have with the business, and their order history. If all of that information is in one digital place, it can make it easier for employees to help customers resolve issues. And that quick and helpful customer service could translate into more orders from the business customer.

Companies also can set up customer-facing dashboards that allow customers to get information on products and orders. “Instead of having to call someone, they can go in and ‘self-service,’ which of course saves time,” Maki says.

That points to something else that more businesses are confronting—selling through their websites. When many people think of e-commerce, they picture the likes of Amazon and eBay. In fact, more businesses are selling products online, even if they aren’t categorized as e-commerce companies. Such companies might not be ready to work with Minneapolis-based SPS Commerce Inc., whose software helps interconnect large retailers with suppliers, distributors, and logistics partners to better meet customer demand.

Regardless of how retail-oriented a company is, more businesses need what SPS COO Jim Frome calls “a channel strategy.” Very simply, it’s integrating the channels of offline and online selling. Frome cites some of the questions such a strategy entails: “What is that going to mean for our business processes? How are we going to inventory items? How might it change the way we order and ship these items?” As the channels expand and become more integrated, a company’s IT system needs to be able to share information not only with customers, but also with vendors and within a company’s various departments.

Whether a business is ready for the kind of sophisticated e-commerce tools offered by a company like SPS Commerce, it is increasingly likely to need digital technology to help it sell more efficiently.

Open-source software

As a company considers how to update its IT, it will need to weigh the options. In addition to cloud computing, there are well-established infrastructure options from companies big and small. But there’s something else that companies can do to boost their IT performance—and save money doing so.

“We are huge proponents of open-source technologies,” says Kevin Zinniel, vice president of business development for Ackmann & Dickenson, a Minneapolis-based business technology consultancy whose specialties include custom application development, website design, and digital marketing. Open-source software comprises code that is free to all developers—and which companies can adjust to their needs.

“We have a saying: ‘We want partners and not hostages,’” Zinniel says. “We don’t want to lock our clients into a proprietary software where they are essentially stuck in that framework.” Software companies, he adds, can raise rates and make it costly to sever the relationship and move to another technology “when you’ve put all your resources into one path.” What’s more, open-source allows a company to change as technology changes. “The more you don’t lock yourself in, the more nimble you can be—across all aspects of the business,” he adds.

One open-source technology that Zinniel leverages frequently is WordPress, a content management system (CMS) that allows companies to easily update their websites and online marketing materials, among other uses. And it’s worth noting that open-source options like WordPress aren’t just for small companies with very limited technology budgets. “You have companies like Amazon, Google, and IBM that at their core use open-source technologies,” he says.

“There’s a misconception about open-source that it’s more vulnerable [than software and platforms that aren’t open-source] in terms of security,” Zinniel says. “But that really comes down to how you configure it, where it’s hosted, what types of data you’re storing and securing.” Anything on the internet, he observes, is vulnerable if it isn’t correctly protected.

What’s next?

With business technology ever changing, it’s worth it for small companies to see what bigger companies are exploring and using. The next big things might be coming sooner than those small firms expect.

As an expert in IT strategy, Joe VanLoy, director of management consulting in the Minneapolis office of KPMG LLP, works primarily with midsize and large firms to help them improve and better manage their technology-based business processes and services. Digital labor is a key trend that CIOs and other IT executives that KPMG has worked with have identified. The phrase means replacing human labor with automation. “As software systems get better and better, many of the repetitive rules-based tasks can be automated,” VanLoy notes. Indeed, he adds, “About a third of the companies that took our [CIO] survey were actually investing in digital labor in the past year.”

There are several aspects of the business where digital labor can add new efficiencies. One area—which VanLoy identifies as “the poster child” of digital labor—is the help desk. “Instead of having to call and talk to a person, you reach an automated agent that is still speaking to you and understanding your language,” he says. This agent can quickly look up the information in a company’s IT system. If the interaction requires more detail, the caller can switch to a live person.

Another digital labor area that VanLoy identifies is data entry. Digital-labor automation allows linkages between subsystems in a company. That way, if the same piece of information needs to be changed in more than one subsystem, it needs to be done only once. Also, repetitive rules-based tasks, such as daily IT system log checking, can be automated. “You can relieve a lot of employee talent from having to do those things,” VanLoy says.

There’s another major trend VanLoy says is just getting started among the larger companies. That’s the use of blockchain.

Though the term is appearing more frequently in the business press, blockchain remains swathed in mystery, largely because it was originally developed as a digital ledger system for bitcoin. But the basic concept has become untethered from that controversial cryptocurrency. As VanLoy describes it, blockchain is “really about having a common record of transactions—basically, it’s a transaction ledger as a service.” As a shared or distributed ledger system, it has the potential of verifying transactions between multiple parties more easily, without requiring intermediaries such as banks or attorneys. “From an efficiency standpoint, this will make a big change,” VanLoy argues.

KPMG has done some blockchain projects with clients. So far, a few larger companies are trying to understand along with their partners how it works before they dive into it, VanLoy says.

It might well be a while before small companies have to deal with the possibilities and challenges of blockchain. But in the IT realm, changes can arrive seemingly out of nowhere. It wasn’t so long ago that cloud-based IT seemed something on the distant horizon. Now, it’s omnipresent. In other words, changes are always going to come in technology. So how can a company prepare its people to adjust when it determines that changes are needed?

Getting on board

Change can be hard. Employees often aren’t eager to embrace it.

Jason Chan, assistant professor of information and decision sciences at the University of Minnesota’s Carlson School of Management, recommends that executives prepare a change management strategy. Such a strategy includes a communications plan covering the people and departments whose work will be affected by the updates. Chan also recommends creating a change management team that includes the affected departments—sales, marketing, accounting, top management, and so on.

“An IT project needs to involve more than the IT team,” Chan says. It’s essential to get everyone else on board, too. Reassuring both IT and non-IT staff is crucial. “Otherwise, the process of change can be slowed down,” he says. Executives need to make sure that their employees understand that change can lead to new efficiencies.

But as leaders of the state of Minnesota can tell you, change can also lead to painful disruption. Planning and buy-in across all constituencies can keep that disruption to a minimum.

Technology’s Impact on Small Businesses Morning Consult, a technology and media firm, surveyed 1,000 U.S. small businesses about technology. Their 2017 survey findings were released in a 2018 report by the U.S. Chamber of Commerce, which recommended greater investments in digital skills training for small businesses.

84%

Using at least one digital platform to provide information to customers

75%

Using digital platforms for sales

57%

Reported that lack of familiarity with the digital tools available is a challenge

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